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Freitag, 10. April 2015

The living on the expense of others glut

In a recent post Ben Bernanke points to the serious problem of constant german trade surplus, which leads to escalating imbalances of cumulated current accounts with a savings glut on one side and unsustainable indebtnes on the other side. While I agree on the destructive consequences of this development with Ben, I like to point out that only money that got created (by the banks) beforehand can be saved. So the savings glut follows an excessive money creation by the banking system. The savings glut, Ben Bernanke complains about, is a direct consequence of excessive money creation by the banks.

Quelle
The tendency of banks to expand their balance sheets, to increase the base of which they generate their income by interest differentials, is driving the level of debts and with that as a direct consequence the level of savings. The US banking system is doing this like nuts for decades now and the US as whole is living on the expense of others by trading the so generated IOUs for all kinds of goods like german luxury cars, japanese high quality products, chinese products and oil. The US is doing that with 88 of their trading "partners" and is in the meantime not only unwilling but unable to deliver real goods in return for this hughe cumulated pile of IOUs aka US$ and US$ nominated (triple A rated!) papers.
While it is certainly a stupidity on the german side to accumulate such amounts of IOUs from someone who is obviously unwilling and unable to deliver real stuff in return, it is the US who enforced the acceptance and savings of US$ all over the place by pushing a so called "Washington consensus" in their own narrow interest.

By the way, the problem created by banks and powerful elites is very obvious on the level of economies, but it also exists inside every economy, where firms and people are forced to accept money created by banks for labour and real things, which end up highly concentrated in the hands of a few (very powerful). The global economy is not a level playing field nor is a single economy a level playing field. There is always a gradient of power which drives imbalances between economies but also inside economies to escalate.
Equilibrium is the pipedream of economists intended to hide this simple fact.

Quelle
And the banking system is instrumental to create that gradient and to increase its steepnes over time (until things break) and is making an enormous business out of this madness.

KABOOM!

Über mich

"Stable order is always provisional and
threatened by complexity. We should finally start thinking that we all
live on the edge of chaos. For this reason, if they were truly digested,
the theories of complexity and chaos could change our way of seeing
what happens in our cultures.They lead us to mistrust all the
totalising and totalitarian conceptions which have the pretension of
telling us with certainty what the world will be like and which
therefore supply us with the instruments to dominate as we may please –
or to help us submit to those who, in their opinion, will dominate us.
Living on the edge of chaos is also an aesthetic choice: the acceptance of living joyously with the unpredictable,
the new and the unknown. Rather than being simply the humiliation of
our arrogance, it is the renunciation of the imaginary "regular income"
of determinism and the transformation of our uncertainties into a
genuine wealth to help us to survive."

Keeling Kurve

Dynastic Cycle

Institute of Computergraphics TU Wien

Hierachy of Complexity

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Roessler Attraktor

"Real economics is the study of how people transform nature to meet their needs," said Charles Hall, professor of systems ecology at SUNY-ESF and organizer of both gatherings in Syracuse. "Neoclassical economics is inconsistent with the laws of thermodynamics."